Funded trading accounts can be an exciting opportunity for traders looking to access substantial capital without putting their own money on the line. However, before jumping in, it’s important to understand the costs involved. These accounts often come with associated fees and stipulations that traders must adhere to. Here’s a breakdown of the primary costs you can expect when dealing with funded trading accounts.
1. Evaluation or Assessment Fees
Most funding firms will require traders to pass an evaluation phase before granting access to their funded accounts. This phase often involves meeting specific profit targets and adhering to set risk management rules.
The cost? Typically, the evaluation fees range from $100 to $600, depending on the account size you’re aiming for. While this may seem steep, it’s a necessary step to demonstrate your skills and manage risk properly.
2. Monthly Subscription Fees
Some funded trading programs charge ongoing monthly subscription fees for maintaining access to the trading platform or the account itself. These fees can vary widely but generally fall between $100 and $300 per month. Before committing to a firm, ensure the potential earnings outweigh the recurring costs.
3. Profit Splits
A profit split is one of the most significant costs to consider. While you get access to substantial capital, the firm will usually take a percentage of the profits you generate. Typically, this split ranges from 20% to 50% in favor of the firm. Pay attention to these agreements as they directly impact your earning potential.
4. Trading Losses and Fees
While funded trading accounts reduce personal financial risk, traders are liable if losses exceed allowed thresholds. Breaching these limits could lead to account suspension or termination. Plus, take note of additional fees, such as platform or data fees, within the agreement.
Maximizing Your Returns
Funded trading accounts can be highly advantageous, but it’s critical to consider all associated costs. To make the most of such accounts, choose a program with transparent fees, a fair profit split, and realistic evaluation requirements. Always read the fine print to ensure you understand the terms before signing up.